Finance Commission Advocates State Self-Revenue Generation

Arvind Panagariya, Chairman of the 16th Finance Commission, urged states to enhance their own revenue for fiscal independence. Special attention was given to Nagaland, with discussions on potential grants and economic challenges. Recommendations will be finalized after consultations, due by October 2025.

Arvind Panagariya, the Chairman of the 16th Finance Commission, has advocated for states to boost their revenue generation to achieve fiscal self-reliance. He emphasized that while usual state grants will persist, increased state revenue remains crucial for larger Gross State Domestic Product (GSDP) and consequently, higher capital incomes.

Nagaland was given special focus, as it heavily relies on central funding. Panagariya highlighted that the state benefits from unique financial provisions, such as a 90% central contribution on certain schemes, compared to 60% for other states. He noted Nagaland's proposals, including incorporating cesses and surcharges in the divisible pool and introducing a 'disability index' to account for local challenges.

The Commission's delegation engaged with Nagaland's officials and stakeholders, including Chief Minister Neiphiu Rio, to discuss significant proposals, like funding for infrastructure and technology projects. Panagariya stated that final recommendations would be made post nationwide consultations, targeted for completion by October 2025.

(With inputs from agencies.)